Bob Iger is back at Disney for a limited 2-year term — but will that be enough?

Iger’s return immediately impacted stock values (though we’ve since seen those drop a bit), and had some analysts cheering. We’ve already heard Iger comment on everything from gun violence to Park Passes since he stepped back into the CEO role, but he’ll face a heavy heap of challenges…and the clock is ticking.

Positive Responses to Iger’s Return

Make no mistake, Iger’s return has brought about some enthusiastic responses from celebrities and analysts. Josh Gad, the voice of Olaf in Frozen tweeted “the GOAT is back!!!!”

I don’t think I’ve ever been so happy. Welcome home @RobertIger – the GOAT is back!!!!

— Josh Gad (@joshgad) November 21, 2022

 

MoffettNathanson analyst Michael Nathanson said, “Magic is back.” And Wells Fargo’s Steven Cahall wrote, “Iger’s resurgence is a positive surprise.”

According to one Bloomberg article, when about 50 media analysts and experts were polled, they didn’t agree on much, but many did agree that Iger was the BEST CEO in the media and entertainment industry.

But Iger isn’t here for an unlimited stay.

Iger Is Only Back for 2 years

When the Disney Board of Directors announced Iger’s return, they shared that Iger had “agreed to serve as Disney’s CEO for two years.” That’s just 730 days or 17,520 hours.

Considering that Iger’s return was announced almost 1 month ago already (November 20th, 2022 was the announcement), you can see how quickly days fly by. Two years will be here and gone before you know it.

But Iger hasn’t just come back for 2 years to do whatever he pleases. He does have some clear directives from the Board — “set the strategic direction for renewed growth” and “work closely with the Board in developing a successor.”

In other words — fix the big losses at streaming and make sure you’ve picked a successor you won’t “regret” choosing in the future. But Iger will have to face so much more.

2 Years May Not Be Enough

The Walt Disney Company Iger is coming back to is not the same as the one he left in 2020. And, frankly, the world we live in is not the same as it was 2 years ago. Between the pandemic, legal battles, and other issues — Iger is not just picking things up where he left them.

And the challenges Iger has to face won’t be exactly the same as the ones he’s faced before.

In Florida, Iger is facing an impending dissolution of the special district arrangement that has allowed Disney to operate in the way it has for the last 50+ years. In the world of streaming, Iger is facing HUGE (billion-dollar) losses. And when it comes to a fan base, he’ll have to deal with those who feel Disney has “lost the magic” or who are upset at recent price increases.

But Iger’s ultimate challenge may be one key thing — time.

2 Years Wasn’t Enough Before

Iger didn’t accomplish everything at Disney in a day. It’s important to remember that while Iger accomplished some tremendous things at Disney, he was the CEO for 15 years.

Iger began in the CEO position in 2005. The acquisition of Pixar took place in 2006, which is rather fast. But he wasn’t able to secure the Marvel acquisition until 2009, the Lucasfilm acquisition until 2012, and the 21st Century Fox until 2019. Will 2 years be enough for Iger to “strike gold” twice?

Granted, Iger will get the benefit of any projects that have already been in the works, but he’ll still have a lot to do.

During Iger’s first tenure as CEO, he kept pushing off his retirement time and time again. An article from Fortune from 2016 shared how there was a chance (at that time) that Iger would be asked to postpone his retirement a THIRD TIME. Lo and behold, Iger’s term kept getting pushed until his departure in 2020.

And even when he did leave the CEO position, he stayed on as Executive Chairman of the Board — not giving up total control.

Now, Iger has, according to the Motley Fool, reportedly indicated that “He has no intentions of leading the media giant for 15 years the way he did before. He simply wants to stabilize the company, point it in the right direction, and hand control to someone else for long-term steering.” But even those are big goals to accomplish in a short period of time.

Picking a Successor Will Be Key

One of the big things Iger will have to face is the choice of a successor. It is a clear directive from the Board that he is tasked with working “closely” with them to make sure history doesn’t repeat itself. But that might be more of a challenge than you think.

This was the very same battle that caused a rift between Iger and the Board in the past. Disney’s Board kept pushing Iger for more details on his succession plan, and Iger reportedly pushed for Chapek as CEO, despite other candidates being tossed around.

According to Business Insider, a former Disney executive once indicated that prior to his departure, Iger started to feel like he wasn’t being fully appreciated as a leader by the board. “He said he was tired of being harangued about [succession] and said, ‘Fine, you guys have someone else run the business.’”

Ultimately, Chapek was the one chosen for the job. He was, after all, hand-picked by Iger, so he’d be sure to do a stellar job for the Company right? Well, the transition didn’t exactly go as smoothly as hoped and Iger ultimately (reportedly) regretted selecting Chapek as his successor, calling it “one of his worst business decisions” (according to those familiar with Iger’s thinking).

So after a 15-year-long term with Iger, Chapek was the successor chosen. And in less than 2 years, he’s been removed. It seems 15 years wasn’t enough time for Iger or the Board to find a replacement that would last the Company for a while — so will 2 years be enough?

Some have also pointed out that Iger’s return can be taken as a dangerous sign. According to the New York Times, Doug Creutz, an analyst at Cowen, said that Iger’s return “gives at least some appearance that Iger, and not the board, ultimately calls the shots at the company, and that Iger’s willingness to fully surrender power to a successor is low.”

He went on to say, “We do not necessarily believe that a lack of leadership is Disney’s problem, and think the change will ultimately make a true transition of power to Iger’s (next) successor even more difficult.”

Will future successors fall to the same fate — never “living up” to Iger? Or feeling a constant sense of fear that Iger will come back to replace them?

Jessica Lessin, the founder of The Information, pointed out that Iger’s return could signal that the Board feels there is “literally one person in the world…capable of running Disney,” and could indicate that there is some kind of “failure” of Disney’s internal system.

Bob Iger is an incredible CEO but the fact there is literally one person in the world the board thinks is capable of running Disney is a head scratcher and a failure of some sort of internal system there over the past decade.

— Jessica Lessin (@Jessicalessin) November 21, 2022

Boomerang CEOs aren’t unheard of, but the real key here is whether 2 years will be enough to prevent Iger from returning time and time again, should a future successor not live up to Board expectations.

See who has emerged as a “top contender” to replace Iger

Could Iger Extend His Term?

As we noted above, Iger has extended his term as CEO many times in the past, so an extension of this 2-year term wouldn’t exactly be surprising.

But this is another place where time isn’t on Iger’s side. Iger is older than he was before — at 71 years old. By the time he finishes, he’ll be around 73. Will he be willing to serve as CEO of a major media Company into his mid/late 70s? It’s possible this 2-year term will really be the end but don’t go placing any high bets just yet.

Iger Has a Lot of Things to Deal With

We’ve done a deep dive into the many challenges Iger will have to face during his 2 years back at Disney, but a big loss in streaming is one of the main ones.

According to earlier statements from Disney, Disney+ is supposed to be profitable by fiscal year 2024. Fiscal year 2023 has already begun, so Iger doesn’t have long to turn things around if they still want to hit that goal.

As of November 2022, Chapek had indicated that Disney still expected the streaming service to be profitable by that time. But so far what we’ve seen are BIG losses in streaming. Within Q4 of Fiscal Year 2022 alone, Disney reported $1.5 BILLION in losses within its direct-to-consumer division.

That’s not usually something you fix with a snap of your fingers. But the introduction of ads, the release of more films on Disney+, and the increase in ad-free Disney+ pricing could help.

Iger will also face a big challenge in streaming (and media in general at Disney) when it comes to the Disney Media & Entertainment Distribution (DMED) division.

The DMED structure took distribution control away from those within the creative side of Disney. Iger has already announced that he intends to put in place a “new structure that puts more decision-making back in the hands of our creative teams and rationalizes costs.” But how will Iger balance giving creatives control while also controlling budgets amid the big streaming losses? Only time will tell.

Not to mention the fact that some things are beyond Iger’s control, like inflation, lingering pandemic concerns, political issues (to an extent), and things like the waning movie theater attendance numbers.

What Now?

As Rick Murarriz wrote for the Motley Fool, “Time is ticking on Iger. He has a lot to do. He just doesn’t have a lot of time to get it all done.”

Munarriz went on to note, “It boils down to fixing Disney+ and improving the theme parks product to the point where it seems 40% better than before the pandemic. Those are just two tasks, but they are huge tasks. Iger’s legacy hangs in the balance. No pressure.”

Will 2 years be enough for Iger to stabilize the Company and choose a successor that won’t have to exit shortly after their arrival? What unexpected challenges could throw a wrench in these plans?

We’ll just have to wait and see whether Iger’s return solidifies his “mythical” status within Disney (O.C. Register) or if results will fall flat, tarnishing his reputation.

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How much do you think Iger can realistically do in 2 years? Tell us in the comments.

The post “Time Is Ticking on Iger” — Can Disney’s CEO Really “Stabilize the Company” in Just 2 Years? first appeared on the disney food blog.